1. Overview Case considerations Additional case information Key topics
7/6/2019
Emdeon Inc.
Overview
Case considerations
Additional case information
Key topics
7/6/2019
Senior Seminar in Finance
FNCE 4850 Senior Seminar

2. Senior Seminar in Finance
7/6/2019
Overview
July, 2009
Marcus Gentles, investment bank analyst, must:
1) determine an issue price for the anticipated IPO of Emdeon (expected to raise $330M);
2) assess the major risk and opportunities associated with the issue.
Spreadsheet available: Emdeon.xls
7/6/2019
Senior Seminar in Finance
FNCE 4850 Senior Seminar

3. Senior Seminar in Finance
Case considerations
Quantitative analysis
DCF of FCF (discounted by cost of equity)
Determine proper discount rate
Comparables analysis (multiples)
Determine proper comps
Determine appropriate multiples
7/6/2019
Senior Seminar in Finance

4. Senior Seminar in Finance
Case considerations
Apply appropriate discount for IPO issue:
Assess current IPO market (exhibit 9 in spreadsheet)
Results of marketing of issue (“roadshow”)
Overall risks associated with issue
7/6/2019
Senior Seminar in Finance

5. Senior Seminar in Finance
Case considerations
What are the advantages and disadvantages of lower versus higher IPO pricing?
What are the overall risks and opportunities associated with the company and its IPO issue?
How should IPO price be set in light of these issues?
7/6/2019
Senior Seminar in Finance

6. Additional information
Recent IPO market activity (see Exhibit 9) in spreadsheet
Roadshow marketing results: issue is oversubscribed
Estimated adjusted EPS for multiple analysis: $.48 - $.55 / per share
Total shares outstanding upon IPO issue: 100 million
7/6/2019
Senior Seminar in Finance

7. Senior Seminar in Finance
Key topics
Valuation—DCF and multiples
Cost of capital
IPO pricing
Assessment of investment risks and opportunities
7/6/2019
Senior Seminar in Finance